Debt Management and Debt Help for Single Fathers

Summary: Debt management, debt help, and expense management are doubly daunting for the divorced or single father who often has to support more than one household. This article contains information which may provide some surprising and welcome relief.

Credit and debt issues are some of the most difficult practical issues facing single fathers today, second only to issues of being able to stay involved with their children. And it’s no wonder that credit and debt issues abound, as many men find the number of households which they must support doubled, with the financial resources to which they have access halved.

 

Add to that the fact that single fathers are universally tarred with the assumption brush that their primary motivation in life is to avoid financial responsibility for their families, all the while their income being depleted by mandatory deductions and legal fees, and their sense of worth and self-esteem (not to mention their financial bottom line) being battered by the effort to still maintain a roof over their own heads along with over those of the children and their children’s mother, and it’s not surprising that many men find themselves in completely over their heads financially.

Often-times men will find themselves shouldering the lion’s share, if not all, of the marital credit card debt, mortgage debt, and tax debts, in addition to the cost of supporting two households on less than two incomes.

Some financial matters are set in stone, and absent extenuating circumstances little can be done to alter them. These things include the amounts which must be paid for support, medical insurance, and medical expenses for children, and the fact that the custodial parent will get the tax deductions for the children no matter how much the other parent is paying.

But there are many other things which financially impact fathers about which something may be able to be done. These include spousal support, marital debt, the family home mortgage and even tax debt. Things which can be make a difference in these areas include the other parent’s ability to earn income, debt negotiation, debt settlement, consumer credit counseling, and even bankruptcy.

Note that the following information is just the very tip of the iceberg, and barely skims all of the information and considerations regarding financial issues regarding these issues. More in-depth information is available in our eBooklets, particularly “Community Property for Everyone” and “7 Ways to Ensure Well-Adjusted Kids After Divorce”

Spousal Support

In many states, spousal support (also known as “alimony”) is considered to be a stop-gap measure, intended to help get the recipient back on their feet and self-sufficient, and not intended as a life-time stipend. Most contemporary orders stipulate (or should stipulate) either a date or event certain when the payments will end, such as “3 years from the date of entry of this order” or “upon the recipient acheiving full-time employment, or five years, whichever comes first”. In many states, the duration of the order will be no more than one-half the length of the marriage, particularly in the case of marriages which were less than ten years in duration. In nearly all cases, the payments will end with the remarriage of the supported spouse.

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In the case that your ex is either failing to produce an income when they could, or is cohabiting without remarrying, you should have your attorney petition the court to reduce or eliminate your payments based on either access to the new partner’s income, imputation of the income they are capable of earning even if they are failing to do so, or both.

Don’t forget that spousal support payments are tax-deductible, and must be treated by the receiving party as income.

Marital Debt Relief

Often, due to a difference in earning power, the man will be shouldered with the majority of the debt upon divorce. While the laws regarding division of debt can vary from state to state, some things are generally true across the board. For example, in many cases, a creditor will be willing to work with you to create a livable payment plan, or to revise an existing payment plan, and may even be willing to accept an offer in compromise, which is where the creditor and debtor agree that the debtor may pay a lump sum which is less than the total amount due, and the creditor will accept it as payment in full and forgive the balance of the debt.

Also, in some cases where one person takes on an inordinate amount of the joint debt, that debt payment can be considered to satisfy, at least in part, the spousal support obligation.

Finally, consumer credit counseling services can be enormously helpful in both helping to restructure debt and make its repayment more manageable, and in keeping the wolves from baying at the door and causing your credit rating to plummet.

The Family Home and Mortgages

It is often the case that, following separation or divorce, the custodial parent and children will remain in the family home, while the noncustodial parent will continue to pay the mortgage for some amount of time. When this is the case it is important to keep a few things in mind.

First, the person who is paying the mortgage should be the one who takes the interest deduction on income taxes.

Second, in some states, particularly community property states, if the marital home can be rented out for a rental amount greater than the amount of the mortgage payments, the spouse who is not living in the family home may be entitled to a payment from the spouse who is, equal to one-half the difference between the rental value and the amount of the mortgage payment.

Finally, if it is not financially possible to maintain the marital home, and particularly if the parent who is living in the home is not able to afford to maintain it on their own, in most cases the Court will agree to order that the home be sold, and any proceeds be split between the parties or applied to pay marital debt.

An excellent resource for debt management information is RealLifeDebt.com.

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